Facebook icon Forward icon

Newsletter August 2016

Welcome to the August edition of the Generate KiwiSaver Scheme Newsletter.

The month that was…

July was a terrific month for your KiwiSaver scheme. First up our growth funds bounced back strongly countering the losses from the previous month. Our conservative fund also had a strong month. Second, Generate won the ‘Investment Provider of the Year’ as chosen by the Professional Advisers Association. It is the second year running that we have won the award and is testament to the continuing hard work of our entire team.

Warren Buffett Wisdoms

After 50 years at the helm of Berkshire Hathaway (which is typically one of our largest investments for both of our growth funds) Warren Buffett has become widely regarded as the world’s greatest investor. In his annual letters to shareholders, and in various interviews he has given, he has shared many of the lessons he has learned during his career. This month:

“Every day, in countless ways, the competitive position of each of our businesses grows either weaker or stronger. If we are delighting customers, eliminating unnecessary costs and improving our products and services, we gain strength. But if we treat customers with indifference or tolerate bloat, our businesses will wither. On a daily basis, the effects of our actions are imperceptible; cumulatively, though, their consequences are enormous…”

This quote really resonates with us as it gets to the heart of what Buffett looks for in a business. It is also a maxim that we live by “on a daily basis” in the way we run your Scheme i.e. “be nimble, be lean and look after you as our members!”

What’s New in KiwiSaver?

Good news for first home buyers as the Government has made it easier to be eligible for the HomeStart grant. Firstly, the maximum income limit has been raised to $85,000 for an individual and to $130,000 for a couple. Secondly, the maximum house price caps have been raised across the country. For further information  click here.

“Investing 101”

Time in the market

All investments need to be considered in the context of time. Time is particularly important with more volatile investments such as shares. The more volatile the investment, the greater the time required to ‘ride out’ any possible downturns in the investment’s value and maximise long-term returns.

The locked in nature of KiwiSaver ensures that most people get to benefit from having time in the market. When a member is close to withdrawing funds from his or her KiwiSaver account - such as for a first home deposit - it can often be wise to have one’s investments in a conservative fund as the member doesn’t have the time available to recoup any potential short term losses.

After the Brexit inspired turmoil seen in June it was pleasing to see global share markets rebound strongly with the MSCI All Country World Index returning 4.0% for the month (in local currency terms).

All of the major stock indices that we follow closed the month in positive territory with developed Asian-Pacific markets outperforming their European and North American counterparts. Energy was the only sector to end the month lower due to declining oil and gas prices in July and negative earnings news..>>MORE

The Conservative, Growth and Focused Growth Funds returned 1.49%, 3.60% and 4.42% respectively (after fees and before tax) in the month of July.

The top performing International Equities Manager (IEM) in July was Polar Capital Technology Trust (PCT), with a 15.0% return in NZD terms. Strong earnings from the likes of Facebook and Microsoft drove the tech sector up over the month..>>MORE

 

Top Holdings as at 31 July 2016

Conservative Fund Growth Fund Focused Growth Fund
International Equities Managers
N/A Worldwide Healthcare Trust T Rowe Price Global Equity Fund
N/A Platinum International Fund Platinum International Fund
N/A Magellan Global Fund Worldwide Healthcare Trust
N/A T Rowe Price Global Equity Fund Magellan Global Fund
N/A Berkshire Hathaway Jupiter European Opportunities Trust
Property and Infrastructure
Infratil  Infratil  Infratil 
Contact Energy Contact Energy Contact Energy
Arvida Group Arvida Group Arvida Group
Ryman Healthcare Ryman Healthcare Ryman Healthcare
Summerset Group Summerset Group Summerset Group
Fixed Income and Cash
Term Deposits Cash & Cash Equivalents Cash & Cash Equivalents
Cash & Cash Equivalents Term Deposits N/A
Kiwi Income Property Aug 2021 Bonds Kiwi Income Property Aug 2021 Bonds N/A
Chorus May 2021 Bonds Rabobank Nederland Perpetual
Securities
N/A
ASB May 2021 Bonds The Warehouse Jun 2020 Bonds N/A

 

International Equities Manager Spotlight

Worldwide Healthcare Trust Plc

Worldwide Healthcare Trust Plc (WWH) offers a UK-listed opportunity for capital appreciation through a diversified portfolio of worldwide biotechnology, pharmaceutical, healthcare equipment, healthcare technology and healthcare services companies.

To maintain its large cap focus, at least 60% of the portfolio must be invested in stocks with a market cap over USD$5 billion. As a counterweight up to 10% of assets can be invested in unquoted companies.

Orbimed Capital, the New York based manager of WWH, is the largest independent specialist investor in the biotechnology and pharmaceutical sectors in the world. It employs over 70 investment professionals and has offices in New York, San Francisco, Tel Aviv, Shanghai and Mumbai. Orbimed has assets under management of approximately USD$15 billion.

As at 30 June, 2016 WWH had net assets of GBP 970 million and had returned 21.7% p.a. over the last 5 years (in local currency).

Next month: Polar Capital Technology Trust

Contact us

If you have any questions after reading your newsletter, give us a call on 0800 855 322 or email us at info@generatekiwisaver.co.nz and we would be more than happy to help.

We thank you for your support,

The Generate Team